Cardboard Boxes Among Many Indicators for Fed The Federal Reserve took a cautious path Tuesday, lowering interest rates by a quarter-point. The move may indicate that the economy is not as soft as some thought. One indicator that Fed economists look at is the demand for cardboard boxes — which seems to be holding up just fine.
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Cardboard Boxes Among Many Indicators for Fed

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Cardboard Boxes Among Many Indicators for Fed

Cardboard Boxes Among Many Indicators for Fed

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Many people think that one of the first places you can spot an economic downturn is in the shipping industry.

So we asked NPR's Adam Davidson to visit one corner of that industry to see if he could find any signs of recession.

ADAM DAVIDSON: As funny as it may sound, cardboard can help understand how the whole economy is doing. That's because just about everything you buy spends some time in a cardboard box. So if the economy is doing well, if people are buying stuff, then the cardboard industry is doing well. If the economy is tanking, then cardboard tanks. It's like an index of cardboard indicators.

So this morning, I drove out to President Container, a 60-year-old cardboard box maker in northern New Jersey. Joe Restifo runs the factory. He can't think of an industry they don't sell boxes to.

Mr. JOE RESTIFO (Vice President of Production, President Container): We have Revlon's, we have M&M Mars, we do a lot in the meat industry, a lot of pizza boxes - we run it all.

DAVIDSON: The biggest debate among economists these days is whether or not the U.S. is heading for a recession. Some say we're in one right now, but for Joe Restifo and President Container, that argument is hard to understand. The cardboard indicator is positive.

Mr. RESTIFO: We're doing very, very, very well. I run 24 hours a day, five days a week, and we have been so, so busy, thank God, that we've been running a shift every Sunday night.

DAVIDSON: He's expecting to produce 1.2 billion - that's with a B - square feet of cardboard this year. He says every industry is ordering boxes - food, make-up, candy, jewelry, toys, electronics - they're all demanding cardboard, which means, of course, they're selling lots of stuff. And that's why Restifo is running the main corrugation machine at high speed.

Mr. RESTIFO: We're running at 565 feet a minute.

DAVIDSON: Wait, it just moved up.

Mr. RESTIFO: It'll move up or down.

DAVIDSON: It just moved up again to 578, and then it moved down to 566.

We're in a small, glass control room right next to the corrugator. It's more than a block long with hot steam pouring out. And with so much demand, there is no room for error here. They have to push out as much board as possible, but they can't go too fast; that'll create a jam.

Mr. RESTIFO: It will jam on the cutoff knife, it could jam in this little scorer, like over there right now, you see that one sheet sticking out?

DAVIDSON: This might be pushing the analogy too far, but on this day of the big Fed announcement, I thought that Restifo's job here is not all that different from Ben Bernanke's - they both have to keep things moving just right, not too fast and not too slow. There's one quite funny thing on the box folding machine. There's a knob that Restifo can turn to adjust the speed; on each side of the knob there's a cartoon picture.

Mr. RESTIFO: You got the rabbit and you get the turtle. Well, the rabbit's fast and the turtle is slow, obviously. We don't want that turtle to be around for very long.

DAVIDSON: For Restifo, the U.S. economy seems to be in full rabbit mode. Now, at first glance, that goes against what the Fed said today. The official statement suggested the U.S. economy is moving in a turtle-like direction. It's slowing. But the Fed clearly wasn't as pessimistic as others. Many on Wall Street and elsewhere are upset with Chairman Bernanke for not cutting rates more aggressively, for not seeing a larger turtle. The chairman might find some comfort, then, in the bullish views of a cardboard maker in northern New Jersey.

Adam Davidson, NPR News.

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